The Q2 2025 VeroFORECAST℠ projects an average nationwide home price appreciation rate of 2.2% over the next 12 months.
Mid-2025 finds the U.S. housing market in a “paused” state as affordability challenges stall the market. Elevated mortgage rates, which continue to hover above 6.6% (though lower than late 2023 peaks, still far above historic lows), combined with stubbornly high home prices, are creating a difficult environment. This has significantly narrowed the pool of qualified buyers, particularly first-time homeowners.
Adding to the complexity is broader economic uncertainty, driven by geopolitical tensions, market volatility, and unpredictable policies. While inflation has cooled from its 2022 highs, it remains above the Federal Reserve’s target. Job growth has also slowed, with the labor market showing signs of weakening, leading many potential buyers to postpone major financial decisions.
One of the few emerging bright spots is a gradual increase in housing inventory. After years of historically low supply, new listings are appearing in greater numbers, particularly in parts of Florida, Texas, and the Southwest, thanks to new construction completions and slower sales activity. However, this rise in supply has not translated into widespread price relief. Many sellers, having locked in lower mortgage rates during the pandemic, are reluctant to lower asking prices, creating a disconnect that continues to stall transactions.
Despite the broader national trends, real estate remains fundamentally regional. Veros’s forecast highlights significant variations across the country.
The strongest markets projected over the next 12 months are smaller metros, attracting buyers priced out of more expensive areas, driven by relative affordability. Conversely, the weakest markets, primarily in Florida and Texas, are seeing negative appreciation due to rising inventory, softening demand, and affordability pressures, compounded by elevated insurance costs in coastal areas.
As we enter the second half of 2025, the housing market shows no signs of a quick rebound. Affordability will remain a central issue until mortgage rates decline meaningfully or incomes catch up with housing costs, leading both buyers and sellers to proceed with caution.
